Florida’s Economy Where It is and Where It ‘s Going

1. Florida’s EconomyWhere It is and Where It ‘s Going

2. My Perspective • Keyed to Budget Processes • Focuses on macro-developments • Relies on the state estimating process • (The tables, charts and figures typically are from CQ’s State Fact finder, EDR, AWI, Enterprise Florida, BEA, Census, and the Federal Reserve St. Louis)

4. For example:

5. Economy: Where Are We Now? • Size • Structure • Other Features • Region • Performance

6. GSP, 2006 $713.5 b Total Personal Income, 2006 $647.6 b GSP, 2006 4th Largest Total Personal Income, 2006 4th Largest Size of Florida’s Economy

7. Gross State Product: 2006(in $ millions)

8. Structure: Gross Domestic Product United States and Florida by Industry, 2006(in $ millions)

9. Size of the Florida’s Labor Force

10. Features • Tourism Spending, 2004 $46.7 b • Tourism Spending per capita, 2004 ranked 4th • Exports, 2006 $20.3 b • Exports per capita, 2006 ranked 34th • Number of Fortune 500 Companies 31 • Number of F/500 Companies per capita ranked 36th • Housing permits, 2005 287,250 • Housing permits per capita ranked 2nd • Bankruptcy Filings (Ind & Bus.), 2006 73,499 • Bankruptcy Filings per capita ranked 31st

11. Impact of International Travel on State Economies, 2004($ millions)

13. Florida Relies More Heavily on Interest, Rent, Dividends and Transfer Payments than Wages Unlike Most States

14. How Well Does Florida’s Economy Perform? • Examine growth • Consider comparisons • Look at effects

15. Non-Agricultural Job Growth, 1990 – 2007Generally Quite Strong, But Slowing Recently

18. Aspects of the Slower Job Growth • Construction (went slightly negative in July) • Financial activities and retail (sluggish) • Information Industry (generally slow, went negative in July) • Manufacturing (generally slow, went negative in July) • Slower professional and business services (flat in August) • Government (Still growing through July with downturn anticipated) • Leisure and Hospitality (went down in August) • Increasing Education and Health Services

19. RegionalDifferences

21. Performance: Gross Domestic Product Per Capita, 2006

24. Average Annual Wages in Florida Lag behind Those Nationally

25. Overall Assessment of Florida’s Economic Performance

26. Current Assessment • The state’s gross domestic product has returned to levels forecast before the hurricane activity of 2004 and 2005 • Recent employment growth and growth in personal income have declined off earlier forecasts and can be traced, in part, to the end of the housing boom (nearly half of 2006 mortgages were innovative) • These declines are reflected in other areas such as the population growth and auto registrations

28. Performance: Distribution of Income, 2003

30. Where is Florida Going? • “Is Florida Over?” Wall Street Journal, September 29, 2007 • Dougherty’s Evidence • Atlas Van Lines moving series goes negative • Increased Housing costs – “Half Backs” • Increased competition for retirees in the SE • Rising insurance and two-tiered property tax • Increased prevalence of hurricanes There is considerable evidence against this proposition

32. Income Prospects • Productivity gains are forecast to continue • Despite these gains, the labor market is expected to tighten slightly with increased dividend and transfer payments • Downside weakness in response to uncertainty in several sectors, including manufacturing and construction, and in the level of in-migration • Equity issues are expected to persist

33. Florida Employment Growth by Industry Sector, 2007 - 2015

34. Sectoral Employment Growth is Forecast to Remain Robust • Retail is expected to see strong gains along with information, employment services, leisure and hospitality • Educational services will show growth especially in K-12 although current forecasts have the number of HS graduates leveling off in coming years

35. Florida Employment Growth 2007 - 2105

36. Occupational Gains Will Occur Across the Board • Most of the occupational gains will come in fields that require little advanced education - clerical, sales and food service • Computer, Healthcare and Legal occupations are forecast to grow the quickest • The retirement of the leading edge of the Baby Boomers will require substantial replacement occupational growth

37. Comments • The “Rachet Effect” persists • There are ample strengths to build upon • Continued population growth is an uncertain key to the future • Shifting economics of retirement introduce new uncertainties • Shifting fiscal structure threatens long standing infrastructural role of local governments (especially in roads) • The wage structure and income inequities will continue to have “base” effects

38. Definitions • Personal Income- an estimate of total gross income, received from wages, proprietor's income, rents, dividends, interest payments, and transfer payments. • Gross State Product (GSP) -the total value of all goods and services produced by a given state. GSP can be expressed as either current or real GSP. Current GSP is the nominal dollar value in a given year. Real GSP is the value of output adjusted for inflation, indexed to a base year. • Disposable Personal Income- the income that is available to persons for spending and saving. It is calculated as personal income less the sum of personal tax payments and personal non-tax payments to Federal, State, and local governments. • Income- a recurrent benefit, usually measured in money, that is derived from capital and labor. The major elements of income are wages (including tips and bonuses), rents, interest, and dividend income, proprietor’s income, and transfer payments • See http://eflorida.com by Enterprise Florida